China's auto sales fall in November for fifth month

BEIJING (AP) — A painful contraction in China's auto market deepened in November as sales fell for a fifth month amid an economic slowdown and consumer anxiety over a tariff fight with Washington. Sales of SUVs, sedans and minivans in the global industry's biggest market plunged 16 percent from a year ago to just under 2.2 million, an industry group, the China Association of Automobile Manufacturers, reported Tuesday.

December 11, 2018

Sales for the 11 months through November were down 2.8 percent from a year earlier at 21.5 million. That puts annual sales on track to shrink for the first time in three decades. The slump is a setback for global automakers that look to China to drive revenue and are spending heavily to meet government targets to develop electric vehicles.

It adds to challenges for communist leaders as they try to shore up cooling economic growth and fight a tariff war with U.S. President Donald Trump over Beijing's campaign for state-led creation of global champions in robotics and other technology industries.

China's economy is forecast to grow by about 6.5 percent this year, down slightly from 2017's 6.7 percent. But that is propped up by higher government spending on public works construction that helps to mask weakness in real estate sales and other areas that weighs on consumer confidence.

The downturn in auto demand has accelerated steadily. November's sales decline was worse than October's 13 percent contraction, which was sharper than September's 12 percent decline. Demand was expected to weaken after Beijing tightened lending controls last year to cool a debt boom. But the slump is sharper than forecast, fueling expectations regulators will cut sales taxes or take other steps to shore up demand.

Sales of SUVs, normally a bright spot for the industry, fell 16 percent from a year earlier in November to 910,000 vehicles. Year-to-date sales were up just under 1 percent at 9 million. Sedan sales were off 12 percent at just under 1.1 million units.

Sales of gasoline-electric hybrid and pure-electric cars and SUVs, which Beijing is promoting aggressively with subsidies and sales quotas, rose 37.6 percent to 169,000. Year-to-date sales were up 68 percent at just over 1 millions.

China is a top market for General Motors Co., Volkswagen AG and other industry majors that look to increasingly prosperous Chinese customers to drive revenue growth. They are spending billions of dollars to develop models to appeal to local tastes.

They face rising competition from young but ambitious Chinese rivals including electric brand BYD Auto, Geely Auto and SUV maker Great Wall Motor. Automakers are rolling out dozens of electrics but depend on gasoline-powered models for their profits.

Chinese domestic brands that had been expanding their market share with lower-cost SUVs and sedans suffered an even bigger decline in November. Total sales by Chinese brands fell 23.3 percent to 909,000 vehicles, worsening from October's 18 percent contraction.

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